The impact of the FED interest rate decision on the AUD.

Many topics impact the strength and therefore the cost of trading the Australian dollar. This includes anything in the other currency being traded, the referendum on EU membership in the U.K is a great example.

On top of this, the local economy in Australia, their change of leadership within the Reserve Bank of Australia, the talk about their future interest rate levels, their election for next month and China.  All of which gets a lot of coverage on financial updates on this site.  The US however gets talked about but not really explained and this is the topic of this article.

The US, the world’s largest economy, has an impact on the demand for the AUD and therefore its cost as it impacts the risk appetite of traders. Traders globally speculate on the AUD a lot and as their risk appetite changes so does the price of the AUD.  The topic point around the world at the moment is the future interest rate hike in the US. Everyone seems adamant that there will be a further hike announced by the FED but they are unsure as to when and it is this changing speculation which is impacting currency prices around the globe.

A week ago the odds of a hike being announced at their next meeting next Wednesday was close to 50%, however on Friday poor unemployment data has resulted in this being contracted to closer to 30%.  As a result risk appetite changed and the cost of buying the AUD on Friday changed to reflect this.  My personal view is that they will not change rates this month, with their economy looking so unclear, the global uncertainty about the future of the EU as a result of the vote in the UK and concerns still in China.  It seems September/October is more probable.

As a result next week when they don’t raise rates expect the price of the AUD to change once more.

If you are in the market and looking to buy or sell AUD for anything from a house purchase to a classic car please make sure to get in contact. Register your interest via email with your contact details and a summary of your situation for live prices, forecasts and spike notifications.  Do so by emailing myself, Steve Eakins at hse@currencies.co.uk

If you would like to check your current suppliers prices against ours then please also email hse@currencies.co.uk for a live trading level.  This task should only take a minute or two but could save you thousands on your exchange.  All I would say is make sure that the comparison is done fairly, so do this within a tight period of time or better still, get a quote from your current provider and take a note of the day and time.  Send this time stamp through to me/us and we can quote in that same market therefore avoiding either party having an unfair advantage as a result of market movement.

If this exercise is done fairly I am sure you will see a saving.

Look forward to hearing from you.